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P. LORILLARD COMPANY Notice of Annual Meeting of Stockholders TO BE HELD APRIL 14, 1964 To the Stockholders of P. Lorillard Company: NOTICE is hereby given that the Annual Meeting of the Stockholders of P. LoRiLLAttB COMPANY, a New Jersey corporation, will be held at the Georgian Ballroom, Americana Hotel, 52nd Street and Seventh Avenue, New York, N. Y., at 2:00 o'clock in the afternoon of April 14, 1964, for the following: (1) The election of thirteen (13) directors to hold office until the next Annual Meeting of Stockholders or until their successors are elected and qualified; (2) Consideration of and voting upon a proposal to amend the By-laws of the Company so as to permit the annual meetings of stockholders to be held in specified locations outside of the State of New Jersey and the City of New York ; and (3) The transaction of such other business as may properly come before said meeting and any adjournment or adjournments thereof. The stock transfer books will not be closed, but only stockholders of record at the close of business on February 25, 1964, will be entitled to vote, notwithstanding any transfer of any stock on the books of the Company after such record date. ANNA F. WOESSNER, Secretary. Jersey City, N. J. March 4, 1964 If unable to be present at the meeting, please sign the enclosed Proxy and return it in the accompanying envelope so that the meeting may be properly held.

Proxy Statement RIGHT TO REVOKE PROXY ANY STOCKHOLDER giving the proxy enclosed with this statement has the power to revoke the proxy at any time prior to the exercise thereof. Your attention is called to the provision of New Jersey law providing that the attendance at the meeting of a stockholder who may have theretofore given a proxy shall not have the effect of revoking the proxy unless the stockholder so attending shall in writing so notify the secretary of the meeting at any time prior to the voting of the proxy. Unless the persons named in the proxy are prevented by circumstances beyond their control from acting, the proxy will be voted at the said meeting and at any adjournment or adjournments thereof in the manner specified therein. BY WHOM AND THE MANNER IN WHICH THE PROXY IS BEING SOLICITED The proxy is solicited by and on behalf of the management of P. LoasLLARD COMPANY. The expense of the solicitation of proxies for this meeting, including the cost of mailing, will be borne by the Company. In addition to the use of the mails, the Company may request persons holding stock in their name or custody, or in the name of nominees, to send proxy material to their principals and request authority for the execution of the proxies and will reimburse such persons for their expense in so doing at a total estimated cost of about Ten Thousand Dollars ($10,000). To the extent necessary in order to assure sufficient representation at the meeting, officers and regular employees of the Company and others regularly retained by the Company, at no additional compensation, will request the return of proxies personally, by telephone or telegram. The extent to which this will be necessary depends entirely on how promptly proxies are received, and stockholders are urged to send in their proxies without delay. The management has no knowledge or information that any other person will specially engage any employees to solicit proxies. 2

VOTING SHARES On January 30, 1964, there were 6,575,548 issued shares of the Company's Common Stock and 98,000 shares of its Preferred Stock. Every stockholder is entitled to one vote for each.share of Common Stock and one vote for each share of Preferred Stock registered in his name at the close of business on February 25, 1964. ELECTION OF DIRECTORS At this Annual Meeting, thirteen (13) directors are to be elected, who shall hold office until the next following Annual Meeting of Stockholders or until their successors are duly elected and qualified. It is the intention of the persons named in the enclosed form of proxy to vote such proxy for the election of the nominees named below. If any of the nominees named below is not a candidate for election as a director at the meeting-an event which the management does not anticipate- the proxies will be voted for a substitute nominee and the other nominees named below. Name o f Nominee Principal Oeeu¢atson otr Em¢loymen dpprosimate amount of cach class of Name of Year securtties of the cor¢oratson when Compan bene{cially in which sueh first ownedydirectly or occa¢ation is etected indirectly as of carried on Director January 30, 1964 J. Edgar Bennett Vice President P. LoriIlard Company 1960 10,747 shares of Morgan J. Cramer and Assistant to President President and P. Lorillard Company 1958 Common Stock(4) 10,918 shares of George 0. Davies Chief Executive Officer Vice President P. Lorillard Company 1955 Common Stock(1) (4) 19,073 shares of Melvin E. Dawley and Director of Finance President and Lord & Taylor- 1950 Common Stock(4) 1,126 shares of Henry E. Erickson Director Vice President Department Stores P. Lorillard Company 1961 Common Stock 1,212 shares of Lewis Gruber and Director of Leaf Activities Chairman of the P. Lorillard Company 1946 Common Stock 18,992 shares of Board Common Stock(2) (4) 3

Principal Name of Occupation or Nominee Employment Name of corporation in which such occupation is carried on Approzimate amount of each class of Year securities of the when Com¢ang beneficially first owned directly or elected indirectly as of Director January 30, 1964 Donald A. Henderson Vice-President, Twentieth Century-Fox 1946 656 shares of Finance Film Corp. Common Stock William A. Jordan Assistant Director P. Lorillard Company 1963 1,745 shares of Harris B. Parmele of Sales Vice President P. Lorillard Company 1950 Common Stock (4) 19,452 shares of Harold X. Schreder and Director of Research Executive Distributors Group, 1956 Common Stock(4) 224 shares of Vice President Inc.-Investment Bankers and Group Securities, Inc. -Mutual Fund Common Stock F. Gladden Searle Industrialist 1943 2,000 shares of Harold E. Stassen Attorney Stassen, Kephart, 1963 Common Stock 1,050 shares of Sarkis & Scullin Common Stock Manuel Yellen V ice President P. Lorillard Company 1956 25,511 shares of and Director Common Stock(3) (4) of Sales and Advertising (1) Includes 3,400 shares held in trusts. (2) Includes 7,400 shares held in trusts. (3) Includes 337 shares held as custodian for his children and 1,950 shares held in trusts. (4) Includes shares held in escrow for release in instalments over ten and fifteen-year periods following termination of employment (see page 6). The numbers of shares to be released annually during the ten-year period and, where applicable, during the fifteen-year period are, respectively, as follows: J. Edgar Bennett, 32 and 174; Morgan J. Cramer, 107 and 291; George O. Davies, 437 and 246; Lewis Gruber, 699; William A. Jordan, 29; Harris B. Parmele, 455 and 246; Manuel Yellen, 437 and 246. Each of the nominees named above is now a director of the Company and, collectively, such nominees comprise the entire membership of the Board. Each of such nominees was elected to his present office by a vote of security holders at a meeting for which proxies were solicited under Regulation 14 of the Securities and Exchange Commission except William A. Jordan who, for more than the last five years, has served the Company in various sales capacities, becoming Assistant Director of Sales on May 1, 1962. 4 10 ~ v m w 00 tn %o

REMUNERATION AND OTHER TRANSACTIONS WITH DIRECTORS AND NOMINEES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1963 The following table sets forth all direct remuneration paid by the Company and its subsidiaries for the fiscal year ended December 31, 1963, to (1) each person who was a director of the Company at any time during such year and whose aggregate remuneration for such year exceeded $30,000; (2) each person who was one of the three highest paid officers of the Company during such year and whose aggregate remuneration for such year exceeded $30,000; and (3) all persons, as a group, who were directors or officers of the Company at any time during such year. Estimated annual retirement benefits to the same persons at normal retirement date under the Employees' Retirement Plan as now in effect are set forth in column (4) of the table. (1) (2) (3) (4) Ca¢acities .4gpregate Remuneration in Which ineludinp Current Remuneration Name Incentive Com¢ensation Was Received Bsismated dnnual Retire- ment Benefit at Normal Re- tirement Date(a) J. Edgar Bennett__-________ $ 84,402.75 Vice President and Assistant to President $21,444 Morgan J. Cramer-__ __ _ 134,485.47 President 20,847 George 0. Davies___ 72,800.10 Vice President 16,722 Henry E. Erickson___-___----- 80,079.58 Vice President 22,053 Lewis Gruber_ 97,747.85 Chairman of the Board__-__- 25,001 William A. Jordan----- _------- 44,118.59 Assistant Director of Sales . 19,647 Harris B. Parmele---- - _------ _ 72,356.47 Vice President-________- _____ 22,053 Manuel 72,797.63 Vice President---------- ~__- 21,144 Directors and officers as a group-________ _ 1,060,016.73(b) (a) In each case, the estimate assumes continued employment until normal retirement date at the salary rate in effect December 31, 1963, and with the same current incentive compensation as that for 1963, and election of a joint and survivor annuity providing benefits to the survivor also. For the contingent awards of incentive compensation payable during each of the ten years (fifteen years in the case of contingent awards for 1960 and subsequent years) after termination of employment, see page 6. (b) Does not include premium of $1,966.37 paid by the Company for an insurance policy on the life of F. Gladden Searle following reduction from $37,000 to $18,500 of group term coverage of Mr. Searle upon attainment of age seventy. In addition to the above, the sum of $32,675 was paid as compensation for legal services in international matters to the law firm of Stassen, Kephart, Sarkis & Scullin of which Harold E. Stassen is a partner. 5

Contingent awards of incentive compensation under Article XII of the By-laws are payable (subject to prescribed conditions) in equal monthly instalments over a period of ten years (fifteen years in the case of contingent awards for 1960 and subsequent years) following the close of the year in which employment by the Company terminates. The respective amounts of contingent awards of incentive compensation for 1963 for the directors and officers referred to in the above table, contingently payable to them during each of the fifteen years after termination of employment and constituting, in each case, one-fifteenth of the contingently payable part of the incentive compensation award for such year (column a), and the total respective instalments contingently payable to them during each of the ten years (column b) and each of the fifteen years (column c) after termination of employ- ment as a result of all contingent awards for years prior to 1963, constituting, respectively, one-tenth and one-fifteenth of the total of all such awards, are : (a) (b) (c) J. Edgar Bennett $ 4,682.58 $ - $ - Morgan J. Cramer 8,693.19 - - George 0. Davies___ 4,682.58 - - Henry E. Erickson 4,682.58 - 333.33 Lewis Gruber 2,677.27 7,412.45 20,058.57 William A. Jordan______ ~~ 1,000.00 388.92 835.00 Harris B. Parmele 682.58 4 - - Manuel Yellen_ , 4 682.58 - - Directors and officers as a group , 36,825.04 10,886.60 23,423.22 In the case of Messrs. Bennett, Cramer, Davies, Parmele and Yellen, columns (b) and (c) above reflect a reduction during 1963 as the result of payment of con- tingent awards in shares of the Company's Common Stock transferred by the Com- pany on Apri130,1963, and placed in escrow to be released over a fifteen-year period (in the case of contingent awards for 1960 and subsequent years) and a ten-year period (in the case of contingent awards for years prior to 1960), subject to com- pliance with the applicable earning-out, non-competition and other continuing conditions to the receipt of contingent awards set forth in the Company's incen- tive compensation plan. The number of shares to be released annually to each such person in the above table as the result of such transfer and of the transfer made on January 24, 1962, is shown in footnote (4) on page 4. As required by 6 NO I r

the terms of transfer and reflected in the remuneration table on page 5, current incentive compensation for 1963 was in each case reduced by the dividends received on such shares during 1963. The shares used for the payment of such contingent awards were purchased by the Company and transferred on the basis of their cost to the Company. Included in the shares so transferred were 10,000 shares purchased from Lewis Gruber on April 22, 1963, at $51.44 per share. At such date, the mean between the highest and the lowest selling prices of the Company's Common Stock on the New York Stock Exchange was $52.69 per share. All of the remuneration set forth was received by, or contingently payable to, the persons named in their capacities as officers or employees of the Company. No options to purchase shares of the Company's Common Stock pursuant to the Restricted Stock Option Plan adopted in 1957 were granted or exercised between January 1, 1963, and January 30, 1964, except that, on September 9, 1963, William A. Jordan exercised an option as to 1,000 shares. The option price of the shares purchased was $39.50 per share. The mean between the highest and lowest selling prices on the New York Stock Exchange for the Company's Common Stock on the date of purchase was $45.56 per share. Under the Stock Purchase, Option and Incentive Plan approved by the stockholders at the annual meeting in 1963, 127,870 shares of the Company's Common Stock were offered on July 31, 1963, to a total of 697 employees at a purchase price of $44.75 per share, a price determined by the Board of Directors of the Company to be 100% of the fair market value of such shares on such date on the basis of the mean price of $44.69 between the highest and the lowest selling prices of the Company's Common Stock on the New York Stock Exchange on July 31, 1963. Three forms of offering were used, namely, a stock subscription arrangement, a stock purchase arrangement and a stock option arrangement. The stock subscription arrangement calls for the issue of stock only when full payment for the stock has been made, requires no down payment but prescribes authorization of payroll deductions equal to approximately twenty per cent of the purchase price annually over a period ending in July, 1968, with interest credits 7

to the employee's account compounded semi-annually at the rate of three per cent per annum on amounts deducted from payroll. The employee has the right at any time until the stock is issued to rescind his purchase as to all (but not as to part) of the shares subscribed for and to the return of all amounts so withheld plus interest credits. The employee has the right of prepayment, but only in full and only on or after August 1, 1966. If employment terminates prior to that date, the purchase is deemed rescinded. A total of 335 shares was offered under the arrangement to directors and officers as a group, but none was offered to any person listed in the remuneration table on page 5. The stock purchase arrangement provides for the immediate sale and transfer of shares, with ten per cent of the purchase price (but not less than $5 per share) to be paid forthwith, annual instalments of approximately two and one-half percent to be paid thereafter, the unpaid balance to be paid in five years with right of prepayment in full but only as to all shares, simple interest payable to the Company at two and one-half per cent to be charged on the unpaid balance of the purchase price. The employee would be entitled to all dividends on the stock at a rate of approximately 5.6 o based on a purchase price of $44.75 per share and upon the dividend rate currently paid on outstanding shares. The stock would be held as collateral, subject to being returned to the Company if the purchase price is not paid within five years without refund of any payments made or release of shares equivalent to such payments, but with no further liability on the part of the employee. If employment is terminated within two years after the purchase agreement is made, the Company is entitled to repurchase all shares for the amounts paid by the employee exclusive of interest. Shares were offered under this arrangement as follows: J. Edgar Bennett, 500; Morgan J. Cramer, 1,500; George 0. Davies, 3,500 ; Henry E. Erickson, 500 ; William A. Jordan, 500 ; Harris B. Parmele, 3,500; Manuel Yellen, 3,500; and directors and officers as a group, 19,450. The stock option arrangement provides for an option term of ten years or such shorter period, but not less than five years, as may be required to qualify the option for specified tax treatment under the applicable provisions of the Internal Revenue Code, subject in any event to earlier termination upon death or severance of employment. Subject to specified exceptions, shares acquired on the exercise of options are required to be held for two years after such 8

exercise. Each optionee must agree to serve the Company for a period of at least two years from the date of grant. Under this arrangement options were granted as follows: J. Edgar Bennett, 3,000; Morgan J. Cramer, 4,000; Henry E. Erickson, 3,000; William A. Jordan, 2,000; and directors and officers as a group, 18,400. Under each of the foregoing arrangements, the employee was not permitted to subscribe for or purchase the shares offered to him until February 3, 1964, at the earliest. Moreover, each of such arrangements contemplated that, before acceptance of the shares offered, a ruling would be obtained as to Federal income tax consequences to the employee and the Company of such arrangement. Because of the possible effect on each such arrangement of tax legislation which on January 30, 1964, was still under consideration, the Company, as of that date, had not applied for such tax rulings and did not propose to apply for such rulings until such tax legislation had been enacted or its effect upon the offering clarified. Until such rulings can be obtained, the Company does not anticipate that any of the shares so offered will be subscribed for or purchased. PROPOSED AMENDMENT TO BY-LAWS Under Section 1 of Article II of the By-laws, as now in effect, Annual Meetings of Stockholders may be held only in the State of New Jersey or in New York City. Since the Company has stockholders residing in every section of the country, it seems desirable to add to the locations at which the meetings may be held. In addition, the Company should derive advantageous regional publicity from the holding of meetings from time to time in various locations, including Greens- boro, North Carolina and Louisville, Kentucky, where the Company's manufac- turing facilities are located. Under the applicable New Jersey statute this may be done by an amendment to the By-laws specifying the permissible locations outside New Jersey. The proposed amendment will permit meetings to be held at such places in New Jersey or in any of the specified municipalities outside of New Jersey as may be designated by the Board and stated in the notice of the meeting. 9

Accordingly, there will be submitted to the meeting a proposal to amend Section 1 of Article II of the By-laws of the Company to read as follows (proposed new material underscored) : "SECTION 1. The Annual Meeting of the Stockholders of the Corporation for the election of Directors and such other business as may properly come before the meeting shall be held on the first or second Tuesday of April, at such place in the State of New Jersey or at such place in New York, New York; Greensboro, North Carolina; Louisville, Kentucky; Chicago, Illinois ; or Los Angeles or San Francisco, California, and at such hour, all as may be designated from time to time by the Board of Directors before notice of the meeting is given, and said designation shall be stated in the notice of the meeting." The affirmative vote of two-thirds in interest of the Company's outstanding stock is required in order that the proposed amendment to the By-laws may be adopted. AUDITORS The Board of Directors has appointed Messrs. Haskins & Sells, Certified Public Accountants, to be the independent Auditors of your Company, and a representa- tive of that firm will be present at the Annual Meeting of Stockholders. CONCLUSION The Annual Meeting is called for the purposes set forth above and for the trans- action of such other business as may properly come before the meeting. At the date of this Proxy Statement the management knows of no other matters which may come before the meeting. However, if any other matters properly come before the meeting, it is the intention of the persons named in the enclosed form of proxy to vote such proxy in accordance with their judgment. Dated March 4, 1964. 10